Research carried out by think tank the Resolution Foundation has suggested that the size of the UK’s six-year ‘stealth tax’ threshold freeze has nearly trebled to £25 billion.
The figure is significantly higher than the previous forecast of £9 billion announced during the 2021 Budget.
A small number of tax thresholds have been frozen since 2021/22 and are set to remain frozen until April 2028. The think tank found that next year’s threshold freeze will raise £12 billion a year by the time of the final freeze in 2027/28.
Adam Corlett, Principal Economist at the Resolution Foundation, said:
‘High inflation has pushed up the projected revenue take from the government’s personal tax threshold freeze to £25 billion a year – almost triple the amount forecast when the freeze was introduced. But higher-income households will be the ones most affected by next year’s major tax rises.
‘High inflation also means benefits are being uprated by 10.1 in April, which will boost low-income households’ finances, although benefits are only set to fully catch up with price rises after April 2024’s uprating.’
Internet link: Resolution Foundation website